Obama: “NO”?

Speaking in North Carolina earlier today, Obama said “no blank check when American taxpayers are on the hook for this much money”

Obama: No blank check for Wall St

The Swamp, September 21, 2008

CHARLOTTE, N.C. – In his first comments about a $700 billion government bailout package meant to help stabilize Wall Street, Sen. Barack Obama on Sunday stopped short of saying whether he supports the proposal, as he laid out some broad economic goals he believes such a plan should include.

“As of now, the Bush Administration has only offered a concept with a staggering price tag, not a plan,” Obama said. “Even if the U.S. Treasury recovers some or most of its investments over time, this initial outlay of up to $700 billion is sobering. In return for their support, the American people must be assured that the deal reflects the basic principles of transparency, fairness, and reform.”

Over the weekend, aides said Obama has spoken to congressional leaders about the proposal, as well as both Bill and Hillary Clinton.

As he addressed a crowd here that his campaign said totaled more than 25,000, the Illinois Democrat repeatedly criticized the White House and his Republican rival, Sen. John McCain.

“The radical idea that government has no role to play in protecting ordinary Americans has wreaked havoc on our economy,” he said.

Obama charged that Republicans have run the economy “into the ground,” as he outlined some broad concepts for reform of the financial industry.

“First, there must be no blank check when American taxpayers are on the hook for this much money,” Obama said. “Second, taxpayers shouldn’t be spending a dime to reward CEOs on Wall Street while they’re going out the door.”

h/t to Jeralyn at Talkleft – “You can read the full text of Obama’s remarks here.”


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    • Edger on September 22, 2008 at 00:34

    Is he playing to his audience? Or playing his audience?

  1. … a statement by Pelosi:

    “Congress will respond to the financial markets crisis by taking action this week in a bipartisan manner that will protect the taxpayers’ interests. The Administration’s $700 billion proposal does not include the necessary safeguards. Democrats believe a responsible solution should include independent oversight, protections for homeowners and constraints on excessive executive compensation.

    “We will not simply hand over a $700 billion blank check to Wall Street and hope for a better outcome. Democrats will act responsibly to insulate Main Street from Wall Street.

    “As we proceed to deal with this crisis, this is clear recognition that the party is over for the Bush Administration’s anything goes, failed economic policies that have damaged our economy, undermined the middle class and further pointed out the need for a New Direction.”

    I don’t think it takes genius analysis at this point to see what’s going to happen politically.

    The Bushies will try to exploit fear in saying that the Act needs to pass with no changes – they’ve already done a good job of it considering the initial responses by Schumer, etc., who were at the Paulson meeting on the order of “Holy Shit are we in trouble!”

    The Dems will try to change the Act.

    The Repubs will obstruct and Bush will threaten to veto.

    The fear will be ratcheted up just as in the Iraq War, exactly the same — or FISA, or whatever else bad decisions have been made in the past 8 years.

    As far as Obama “meaning” what he says or not, why wouldn’t he mean it?  Even those who have excoriated this Act agree that some kind of bail-out is inevitable and necessary.

    My focus is on what we will do if the Repubs win yet again and this Act is passed without safeguards for the most vulnerable — and I’m not talking about the middle class here, but the poor.  People will die, lots of people.  Hell, they are dying already.

    • Edger on September 22, 2008 at 01:29

    Warren at They gave us a republic… quotes from William Greider at the Nation:

    The Republican mantra of no mercy, let the markets decide, and no handouts should be turned back against them. They have created a society where it’s okay to take away insurance for children, screw Veterans, screw workers, screw the middle class, and cut welfare benefits. Well, they screwed themselves–no mercy for them.

       If Wall Street gets away with this, it will represent an historic swindle of the American public–all sugar for the villains, lasting pain and damage for the victims. My advice to Washington politicians: Stop, take a deep breath and examine what you are being told to do by so-called “responsible opinion.” If this deal succeeds, I predict it will become a transforming event in American politics–exposing the deep deformities in our democracy and launching a tidal wave of righteous anger and popular rebellion. As I have been saying for several months, this crisis has the potential to bring down one or both political parties, take your choice.

       Christopher Whalen of Institutional Risk Analytics, a brave conservative critic, put it plainly: “The joyous reception from Congressional Democrats to Paulson’s latest massive bailout proposal smells an awful lot like yet another corporatist lovefest between Washington’s one-party government and the Sell Side investment banks.”

       A kindred critic, Josh Rosner of Graham Fisher in New York, defined the sponsors of this stampede to action: “Let us be clear, it is not citizen groups, private investors, equity investors or institutional investors broadly who are calling for this government purchase fund. It is almost exclusively being lobbied for by precisely those institutions that believed they were ‘smarter than the rest of us,’ institutions who need to get those assets off their balance sheet at an inflated value lest they be at risk of large losses or worse.”

       Let me be clear. The scandal is not that government is acting. The scandal is that government is not acting forcefully enough–using its ultimate emergency powers to take full control of the financial system and impose order on banks, firms and markets. Stop the music, so to speak, instead of allowing individual financiers and traders to take opportunistic moves to save themselves at the expense of the system. The step-by-step rescues that the Federal Reserve and Treasury have executed to date have failed utterly to reverse the flight of investors and banks worldwide from lending or buying in doubtful times. There is no obvious reason to assume this bailout proposal will change their minds, though it will certainly feel good to the financial houses that get to dump their bad paper on the government.

       A serious intervention in which Washington takes charge would, first, require a new central authority to supervise the financial institutions and compel them to support the government’s actions to stabilize the system. Government can apply killer leverage to the financial players: accept our objectives and follow our instructions or you are left on your own–cut off from government lending spigots and ineligible for any direct assistance. If they decline to cooperate, the money guys are stuck with their own mess. If they resist the government’s orders to keep lending to the real economy of producers and consumers, banks and brokers will be effectively isolated, therefore doomed.

  2. … Krugman seems cynical about the Dems:

    Found in a comment from Minerva over at Daily Kos:

    He’s (McCain) apparently blasting the plan

    Krugman’s latest post:

    As I read what’s happening now, John McCain is denouncing the Paulson plan, while Barack Obama – out of a sense of responsibility for the financial system – is only offering cautious criticism.

    The Obama people – and the Congressional Democrats – do know that the Republicans will run a populist campaign against them on the basis that they voted for a horrible big-government program, don’t they?

    Apparently Democrats know it now…

    I don’t care if the motivations are purely political or highly principled.  I just don’t want this Act to pass as is.  So whatever it takes.

    Seems Krugman agrees with you in terms of being cynical … but I don’t agree with either of you when it comes to that aspect.  Krugman can’t read Obama’s mind any more than any of us can.

    But hell … let a thousand blossoms bloom!  ;-P

  3. in a perfect world, we would want a presidential candidate to do/say right now. I’m not asking that facetiously…I’m really wondering.

    If a deal is struck – it will be Paulson and Bushco who will be implementing it for 4 months. I might be clearer what position to take if we weren’t looking at that reality right now.

    Chris Bowers is making a case for waiting until the election is over to do anything. And interestingly enough, Bill Kristol said almost the same thing on Fox News Sunday. Making my head spin….  

  4. it looks like many on the right are reaching the same conclusions about this bailout as those of us on the left.

    I just checked Redstate and find that they’re happy about a statement by Rep. Mike Pence. Here’s the money quote.

    Congress must not hastily embrace a cure that may do more harm to our economy than the disease of bad debt.

    And I found a really funny quote from a guy named Jim Henley.

    Wouldn’t it save administrative costs if I just started giving my money to random rich people?

  5. A report in Financial times gives an analysis of the crisis:  

    “…Last week saw the demise of the shadow banking system that has been created over the past 20 years…”

    “…A generalised run on these shadow banks started when the deleveraging after the asset bubble bust led to uncertainty about which institutions were solvent. The first stage was the collapse of the entire SIVs/conduits system once investors realised the toxicity of its investments and its very short-term funding seized up…”

    “…The next step was the run on the big US broker-dealers: first Bear Stearns lost its liquidity in days… The pressure moved to Morgan Stanley and Goldman Sachs: both would be well advised to merge – like Merrill – with a large bank that has a stable base of insured deposits….” *** (See note below)

    “…The third stage was the collapse of other leveraged institutions…The fourth stage was panic in the money markets…”

    “…The next stage will be a run on thousands of highly leveraged hedge funds…”

    “…The real economic side of this financial crisis will be a severe US recession…(&several factors)…will lead to a recession in the eurozone, the UK and most advanced economies.

    Ok, I saw the happy talk financial people shaking their heads on TV, blaming bush & co, but still supporting McDeregulation…still protecting their ass-ets.

    ***Well Morgan Stanley & Goldman Sachs did one better– Fed Allows Goldman, Morgan Stanley to Become Banks  

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